Wall Street stock indices pulled back on Wednesday as intensifying Middle East conflict drove oil prices upward, prompting investors to lock in profits following a historic run of record highs.
At 10:03 a.m. ET, the Dow Jones Industrial Average fell 278.51 points, or 0.54%, to 51,029.28, the S&P 500 lost 27.18 points, or 0.36%, to 7,582.48 and the Nasdaq Composite lost 134.41 points, or 0.50%, to 26,959.49.
At the open, the Dow Jones Industrial Average fell 86.9 points, or 0.17%, to 51,220.92. The S&P 500 fell 4.5 points, or 0.06%, to 7,605.31, while the Nasdaq Composite dropped 1.1 points, to 27,092.845.
Fighting escalated sharply mid-week after an Iranian drone attack struck a passenger terminal at Kuwait international airport. Kuwait is a key US ally, and the strike resulted in one fatality and left 63 others wounded. The high-profile attack represents one of the most dangerous challenges yet to an already precarious ceasefire, which had otherwise managed to endure despite intermittent, isolated skirmishes.
The rising geopolitical instability immediately spilled over into energy markets. Crude oil values marched higher on Wednesday, with global benchmark Brent crude rising 1.3% to trade at $97.26 per barrel, while West Texas Intermediate (WTI), the US benchmark, gained 1.4% to settle at $95.06.
Adam Sarhan of 50 Park Investments said markets were adjusting after a “huge rally” led by tech stocks.
“We had a huge rally, tech has been leading the way up. It’s perfectly normal and healthy to see the market consolidate after a big move up,” Sarhan said.
He added US equity markets remained in a “very bullish environment, specifically for tech and AI.”
On the economic data front, ADP report said employment in the US private sector rose more than expected in May, with hiring seen across a range of industries.
“The market is a mirror of the economy, even with high inflation and energy prices, as long as people have jobs, we still have a very strong economy,” Sarhan said.
Another report showed US services activity expanded in May, despite rising cost pressures. The Institute for Supply Management’s (ISM) services index came in at 54.5% last month, up 0.9 percentage points from April’s figure.
Key Stock Movers
Stocks of Datadog, Palo Alto and IBM fell between 6.7% and 7.7%.
Broadcom shares fell 1.2% ahead of the company’s quarter earnings report due after market close.
Marvell Technology shares bucked the trend and rose 2%, hitting $250 billion in market value.
GameStop stock soared 8.5% after the firm posted a rise in quarterly revenue and unveiled a $2 billion share buyback plan.